The Federal Transport Oversight Service (Rostransnadzor) has banned the shipment of oil in tank cars intended for transporting light oil products.

"Rostransnadzor has ordered the repeal of a telegraph instruction from OJSC Russian Railways (RZD) (RTS: RZHD) about [such] shipments on special conditions," the regulator said in a statement posted on its website on Friday.

It was reported earlier that railroad operators were supposed to do this by April 1, bringing permit documentation for shipment of oil products in tank cars in line with current rules. RZD sent out a telegram about Rostransnadzor's order on March 26.

"In the technical specifications of Russian producers it is stated that these tank cars can transport both light oil products, including gasoline, as well as dark - oil, while some Ukrainian producers set restrictions - only for transporting gasoline," an official at RZD told Interfax. "Essentially, operators did not comply with the demand to bring documentation in line with regulations on time," he said. A telegram was issued on March 30 that pushed the deadline back to April 4.

Russian Deputy Prime Minister Igor Sechin and Transneft (RTS: TRNF) chief Nikolai Tokarev warned that ESPO-related oil exports might be disrupted, the Vedomosti newspaper said on April 3, citing a letter dated March 28. Up to 5,000 of the 8,000 cars that Transneft uses to ship oil from Skovorodino to the port of Nakhodka (15 million tonnes per year) could be covered by the ban. "That would disrupt the export program and damage Russia's image as a dependable energy supplier," Transneft's Tokarev said.

But a Transneft representative told the paper that the threat to exports had passed. "Thanks to prompt, intervention by the government the issue is being coordinated without detriment to shipments," he said. A source close to the company said that it had been possible during talks with RZD to reduce the number of cars subject to the ban to a few hundred. This decision was made after a meeting at the Federal Railroad Transport Agency.

"Right now the deadline [for bringing permit documentation in line with rules] is being extended until the end of April, until the Rostransnadzor order goes into effect. The corresponding telegram will be sent out soon. On the orders of federal agencies, RZD has begun working out the issue of possibly shipping oil in gasoline tank cars on special conditions, 'under the responsibility of the shipper,'" the RZD official told Interfax at the time.

"Some plants are intentionally narrowing the range of shipped freight due to claims from one Ukrainian company that attributed the failure of solebars to improper use of tank cars," he said, adding that these requirements are in large part technical. "Russian and Ukrainian tank cars, in terms of structural parameters, don't differ from one another in any way. In the operation of tank cars there are two restrictions - on the height of the load (no more than 80% of volume) and on tonnage. If both of these conditions are observed, there is no threat to traffic safety. The claims of Ukrainian producers are an attempt to evade responsibility for substandard products, instead of recalling this batch like producers throughout the world do," he said.

Some 40,000 tankers of this type or 20% of the whole fleet are used to carry oil and petroleum products.

RZD tightened its requirements after a series of major rail road accidents, the latest of which took place at the end of January, when 17 tanker cars carrying oil were derailed in the Amur region. RZD has blamed defects, namely failure of the freight car axles, for the accidents, but Ukrainian manufacturer Azovmash claims they were not put to their intended use, that they should have been at least 20% but not more than 80% full.

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Copyright 2012 Interfax News Agency. All Rights Reserved.

(Originally published May 5, 2012, in Russia & CIS Business and Financial Newswire.)